Massachusetts employers turned optimistic in June for the first time since February.
The trade group Associated Industries of Massachusetts reported its Business Confidence Index rose 2.4 points in June to 50.6.
The BCI is scored on a 100-point scale, where a score above 50 indicates optimism and those below 50 indicate pessimism. The monthly Business Confidence Index is based on a survey of more than 140 Massachusetts employers and has been published by AIM since 1991.
The index last reached optimistic territory in February with a score of 52.0. The index fell into pessimistic territory in March and remained there with scores of 47.9 in April and 48.2 in May.
The June increase may reflect stability in the Massachusetts and U.S. economies following several years of elevated inflation, rising interest rates, and shifting global economic conditions, AIM said. Although economic growth has slowed since the post-COVID recovery, consumer spending has continued to support overall economic activity.
“Economists generally expect moderate economic growth rather than a recession or a period of rapid expansion,” Sara Johnson, chair of AIM’s Board of Economic Advisors, said in a statement. “The economy’s performance will depend on whether inflation remains under control, interest rates gradually decline, productivity improves, and policymakers can maintain confidence among businesses.”
Volatile energy prices and the high cost of doing business did temper employer confidence, according to AIM. Energy affordability remains a persistent threat to the state’s economic competitiveness. Those concerns left AIM’s Future Index, which measures the expectations for the next six months, in pessimistic territory at 49.5.
“All of our goals are important, but if we can’t afford to keep the lights on, we will not be successful in ushering in a sustainable energy future,” Brooke Thomson, president and CEO of AIM, said in a statement.
Geopolitical headwinds weighed on Massachusetts businesses. In the monthly survey, one Western Massachusetts manufacturer reported major supply chain disruptions and rising operational costs driven by the ongoing global trade war and tensions with Iran.
Despite those concerns, several of the index’s component measures improved in June as day-to-day operations stabilized. The Company Index, which measures confidence in employers’ own operations, increased to 55.1, while the Current Index rose to 51.8.
The Manufacturing Index gained 6.2 points to reach 52.6, and the Employment Index jumped 5.8 points to 53.3 as companies compete for skilled workers.
Sarah Bruns is a correspondent for Worcester Business Journal.
